FI360-Homework 1

FI360-Homework 1 - Foundations of Financial Management FI360 Homework Assignment 1 1 If all companies had an objective of maximizing shareholder

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Foundations of Financial Management FI360 Homework Assignment 1 1. If all companies had an objective of maximizing shareholder wealth, would people over all tend to be better or worse off? In theory, maximizing earning per share would tend to make the shareholders overall better off, but it has disadvantages and unforeseen risks with each investment. If a company’s only objective is to maximize market price per share the stock would never pay a dividend. 2. What is Financial Management all about? Financial Management is concerned with the planning, directing, monitoring, organizing, and controlling of the monetary resources of an organization. 3. Explain why judging the efficiency of any financial decision requires the existence of a goal. Because judgment on whether or not the financial investment is good or bad must be based on some standard. 4. Should the managers of a company own sizable amounts of common stock in the company? What are the pros and cons?
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This note was uploaded on 02/09/2011 for the course FIN 360 taught by Professor Smith during the Spring '10 term at Park.

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FI360-Homework 1 - Foundations of Financial Management FI360 Homework Assignment 1 1 If all companies had an objective of maximizing shareholder

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